Union Cabinet approved the terms of reference of the 8th Central Pay Commission

Union Cabinet approved the Terms of Reference of the 8th Central Pay Commission, which will be headed by Justice Ranjana Prakash Desai, a former Supreme Court judge and the chairperson of the Press Council of India.Central Pay Commissions are constituted periodically to review the pay structure, retirement benefits, and service conditions of Central Government employees.These commissions are usually formed every ten years, with the last (7th) Pay Commission implemented from January 1, 2016.The 8th Pay Commission was announced by the Government in January 2025, with its recommendations expected to guide salary and pension revisions from January 2026.

8th Central Pay Commission

¨     The 8th Central Pay Commission will be a temporary body. It is expected to submit its recommendations within 18 months from its constitution. It may consider, if necessary, sending interim reports on any of the matters as and when the recommendations are finalized.

¨     The recommendations are likely to take effect retrospectively from January 1, 2026, with allowances expected to be revised prospectively.

¨     The government’s expenditure on pay, pensions, and allowances is projected to exceed ₹7 lakh crore in 2025–26, accounting for nearly 18% of total revenue expenditure.

¨     The 8th Commission’s Terms of Reference were finalised after consultations with various ministries, state governments, and employee representatives through the Joint Consultative Machinery.

Key Parameters for Recommendations

¨     The Commission will consider the prevailing economic conditions and the need for fiscal prudence while framing its recommendations.

¨     It will ensure that adequate financial resources remain available for developmental and welfare expenditure.

¨     It will take into account the unfunded cost of non-contributory pension schemes.

¨     It will assess the likely financial implications for state governments that usually adopt similar recommendations with modifications.

¨     It will examine the emolument structures, benefits, and working conditions of employees in Central Public Sector Undertakings and the private sector for comparative analysis.